Why fund of funds

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I Accept Show Purposes. Your Money. Personal Finance. Your Practice. Popular Courses. Alternative Investments Hedge Funds Investing. FOFs usually invests in other hedge funds or mutual funds. The fund of funds FOF strategy aims to achieve broad diversification and minimal risk. Funds of funds tend to have higher expense ratios than regular mutual funds.

Pros Ultimate in diversification Professional management expertise Alleviation of risk and volatility Exposure to assets usually beyond small investors.

Cons Additional layer of fees Risk of overlap in holdings Difficulty in finding qualified managers, funds. Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace. What Is a Diversified Fund? A diversified fund is a fund that is broadly diversified across multiple market sectors or geographic regions.

What Are Layered Fees? An investor pays layered fees when they pay multiple sets of management fees for the same set of assets. Institutional Shares Institutional shares are a class of mutual fund shares available for institutional investors. What Is a Hedge Fund? In addition to our investment expertise you can find out how GoCardless can help you with ad hoc payments or recurring payments.

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